On July 1, 2009, CMS released the 2010 Medicare proposed physician fee schedule (“PPFS”) which is scheduled for finalization on November 1, 2009. While CMS will accept comments on the PPFS until August 31, 2009, policy modifications which are included in the rule will affect medical services furnished in 2010 by over 1 million providers paid under Medicare. Contained in the 2010 PPFS are provisions related to changes in several polices and provider payment rates. Specifically, the following sections list relevant subject matter containing key changes and summarize the proposed modified rules:
- Physician Payments Generally – The 2010 PPFS includes confirmation of a planned 21.5% reduction in Medicare physician payments. Unless Congress reverses this payment cut prior to issuance of the final rule on November 1, 2009 this reduction will become applicable on January 1, 2010.
- Definition of Physician Services – The proposed new rule indicates that physician-administered drugs will be excluded from the definition of “physician services” for purposes of calculating the physician update formula. Such change seemingly anticipates upcoming executive review and legislative action which may provide for fundamental reforms related to the issue of Medicare physician payments. While this proposed modification will not change the forecasted payment rate update, CMS believes it will reduce the number of years going forward in which physician payments will experience a negative growth rate.
- Consultation Codes – In the PPFS, CMS has also proposed to cease payments for consultation codes. Typically billed by specialty physicians, such codes are paid by Medicare at a higher rate than evaluation and management (“E&M”) codes. Following this currently-slated modification, CMS plans to redistribute the resultant savings to increase payments for existing E&M services.
- Initial Preventive Physical Exams (“IPPE”) – CMS also presented in the proposed rule its intent to increase payment rates for the IPPE in order to be more commensurate with reimbursement for more complex services.
- Professional Liability Insurance Expense – The PPFS also aims to refine the manner in which Medicare addresses the cost of professional liability insurance via provider payments. While no sweeping changes are forecast as related to this particular issue, CMS hopes to promote payment equity by redirecting the portion of Medicare payments allocated for malpractice insurance to physicians who experience the highest professional liability expenses.
Collectively, the proposed changes related to practice expenses, consultation codes, and malpractice costs will have the effect of increasing payments to primary care physicians by approximately 6% to 8%. Additionally, CMS has proposed the following modifications:
- New Medicare Benefit Categories – The 2010 PPFS also provides for the implementation of certain items contained in the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”). Specifically, CMS aims to address MIPPA provisions by adding new Medicare benefit categories for cardiac and pulmonary rehabilitation services as well as chronic kidney disease education. In addition, the proposed rule provides detail related to the content, funding, and criteria for coverage of such services which are slated to begin on January 1, 2010.
- High Cost Imaging Services – Given concerns expressed by both the Medicare Payment Advisory Commission (“MedPAC”) and the U.S. Government Accountability Office (“GAO”), CMS has proposed two changes in the PPFS related to the significant growth in high cost imaging services:
- Payment Reduction – First, CMS intends to reduce payments for services requiring the use of expensive equipment. The goal of this particular modification is a redistribution of the resultant savings to increase payments for other services, including those consistent with primary care.
- Accreditation of Suppliers – Additionally, CMS has proposed the implementation of a requirement contained in MIPPA which stipulates that suppliers of the technical component of advanced imaging services must be accredited by designating accrediting organizations (“AOs”). While such a requirement would not begin until January 1, 2012, it would apply to mobile units, physician offices, and independent diagnostic testing facilities which produce the images. The requirement would not, however, apply to the physician interpreting the results. Finally, CMS plans to address other issues peripheral to this proposed modification in a separate regulation (i.e., supplier accountability, business integrity, physician & technical training, quality of services, and performance management).
- Electronic Prescribing Incentive Program & Physician Quality Reporting Initiative (“EPIP” and “PQRI”, respectively) – The PPFS contains several modifications aimed to promote improvement in quality of care and patient outcomes via revisions to the EPIP and PQRI. Specifically, providers and practices who are eligible for incentive payments related to the EPIP and PQRI will be eligible in 2010 for incentive payments under each program of 2% of their total allowable charges for the reporting periods. In addition:
- EPIP – Through revisions contained in the PPFS, CMS aims to simplify reporting requirements relevant to electronic prescribing as well as to provide more reporting options for eligible providers. Additionally, the PPFS contains a new process in order for group practices to be considered electronic prescribers.
- PQRI – The proposed new rule also adds (i) additional measures for eligible providers to report under the PQRI and (ii) a new process for use by group practices in order to report quality measures. Furthermore, the PPFS contains several additional changes for 2010, including:
- The addition of 22 individual PQRI measures and six group measures;
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The addition of an electronic health record (“EHR”) reporting mechanism.
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